Liquidnet Europe released its member survey regarding how some of the largest buy-side institutions in Europe are thinking about two impending regulations: the European Commission’s Markets in Financial Instruments Directive (MiFID).
“With our buy-side Membership only base, Liquidnet Europe is uniquely situated to conduct a study about how these regulations are going to change the industry,” said John Barker, Managing Director of Liquidnet Europe.
“What we found most interesting was that with all the talk about defining the regulations, there was little discussion around the buy-side’s own opinions of them. That is why we initiated this survey, and we received an extraordinary response from Members replying with their anonymous and personal views of the regulations.”
The survey reported that more than half of the respondents think MiFID is high cost/low benefit.
Overall, members’ responses to the MiFID questions show a broad variance in opinions. Specifically, responses are essentially split three ways regarding whether MiFID would be an improvement, a detriment or have no effect on the buy side. However the cost of compliance with this regulation seems to be a large concern.
More than 55% of respondents said that in their opinion MiFID would create high cost and provide little benefit. At the same time, 27.7 percent of the Members who responded said they thought complying with the regulation would be inexpensive but would not benefit them, and only 16.7 percent said it would be inexpensive and benefit them greatly. Almost half the respondents (43.8 percent) said their firm does not plan to spend any money to meet the MiFID requirements. In response to whether traders think that MiFID will be an improvement or a detriment to the buy side, 38.9 percent said it would be an improvement, 33.3 percent said it would be a detriment and 27.8 percent said they believed there would be no change.
More than half (55.6 percent) said that their use of electronic venues will increase as a result of MiFID, and 44.4 percent said their use of electronic trading venues will not change. When asked if, in its current form, Members thought that MiFID would deliver best execution once implemented, 66.7 percent answered negatively and 33.3 percent answered positively.